Haha…just kidding.
Frankly, I dread this time of year because of all the robocalls (and texts), worthless mailings, and embarrassing commercials. But, for as much angst as election season can cause, it can often lead to very good market results! That’s what I’m focused on and what I want to talk a bit about today. I’ll leave the politics to your favorite talking head.
One thing that is as certain as election season rolling around every two years is the palpable worry it creates in the minds of investors. Our clients are no different. I hear it in our regular discussions with clients and through the emails and calls that become more frequent around this time of year. And while I totally understand the uncertainty that comes with general elections, I think most of this fear and concern is misplaced, at least when it comes to financial markets and the economy. Don’t get me wrong. Elections have consequences in a variety of ways, and the results influence our lives. But that influence just doesn’t typically extend to financial markets or your portfolios.
So, while I won’t tell you not to be bothered if your team doesn’t win, I will attempt to convince you that it doesn’t matter to your portfolio and, more importantly, to your long-term financial plan.
I want to share this great chart from our partners at First Trust:
What you’ll see in this chart, which shows the S&P 500 returns before, during, and after midterm elections, is that while the market may struggle leading up to the election (certainly compared to the non-midterm average), the month of the election (November) and the next 11 months tend to be much stronger than non-midterm years. In fact, the midterm election returns for the next 12 months are nearly double those of non-midterm years. That’s a significant difference!
If you like this kind of information, or if you are particularly antsy about this year’s election, here’s a link to the entire eight-page Midterm Election Client Resource Kit. Take a look. You won’t be sorry.
I know, I know… “this time is different.” I hear it all the time. And, frankly, the media and the respective politicians want you to think that so you’ll vote and watch all of their coverage (gotta sell those ads!). I’m quite confident that many of you won’t like the outcome, and many of you will love the outcome. It’s part of life. I’m not going to tell you how to feel (or think, or vote). But I hope you’ll at least try to keep this information in mind when you think about your investments and your long-term financial security.
Until next time… ignore the noise and focus on the long term.
Past performance is no guarantee of future results. For illustrative purposes only and not indicative of any actual investment. The S&P 500 Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance. Investors cannot invest directly in an index. Index returns do not reflect any fees, expenses, or sales charges. These returns were the result of certain market factors and events which may not be repeated in the future. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Tracking: 1202244-02-01